The problem of axially symmetric TM-wave diffraction from a bicone conjoined with an open-ended conical cavity is analysed rigorously. The scatterer is formed by the perfectly conducting semi-infinite and truncated semi-infinite conical surfaces; the spherical termination of an internal area of the truncated cone creates the open-ended cavity. In this paper the certain physical aspects of diffraction which are known to cause mathematical difficulties are considered. It includes an accurate analysis of the wave-mode transformation phenomena at the open end of the cavity, as well as a study of wave radiation from the cavity into the biconical waveguide. The primary outcome of this paper is a precise treatment of the wave diffraction problem mentioned above using new techniques and establishing new properties of resonance modes’ penetration into the biconical waveguide region.